Small business loans with no credit check are very rare for most lenders and typically at least a soft credit check will be required. Unlike a hard credit check, the soft check doesn’t impact your score and reveals less information to the lender, which is good for business owners with poor credit that need financing.
Fundbox, which sponsored this article, offers short-term lines of credit with terms between 12 and 24 weeks that small business owners with poor credit can potentially qualify for. Repayment is weekly and rates start as low as 4.66% for up to $100,000. You can qualify in minutes with no initial hard credit check.
What Small Business Loans With No Credit Check Are
Small business loans with no credit check are relatively rare and are typically backed by collateral and guarantees to secure the debt. Instead of a credit check, these lenders rely on business performance, existing assets, and recent business growth to verify creditworthiness. More commonly, lenders rely on a soft credit check for their evaluation.
As an example, to qualify borrowers, Fundbox relies on outstanding invoices, business-specific information, and a soft credit check. A soft check is not reflected on your credit report as an inquiry. It also reveals a high-level summary of your credit and can qualify you for a larger loan. Once you qualify and accept the loan with Fundbox, you will still receive a hard credit check the first time you draw funds from the account.
This hard credit check will be reflected on your credit report as an inquiry and may impact your overall score. It also reveals more detailed information in your credit report to the lender. However, by this point, you are already qualified for a loan, unlike most other forms of financing, like business credit cards that require the hard check at the application stage. After your first draw, any subsequent withdrawals from the line of credit will only require a soft credit check.
7 Types of Business Loans With No Credit Check
Small business loans with no credit check typically include lines of credit, accounts receivable financing, merchant cash advances, and more. There is a range of possible working capital options available to business owners. The specific type of no credit check business loan depends on the specific needs, performance, and operations of the business.
Small business loans with no credit check do not require a specific minimum FICO or personal credit score. Instead, these business loans will typically rely on accounting data such as business transactions, number of invoices, and the number of customer relationships. Although there is no stated minimum, some of these lenders may still require a soft check to qualify, with a hard credit check before they advance you the money.
Seven types of small business loans with no credit check are:
1. Small Business Line of Credit With No Credit Check
A small business line of credit with no credit check is a business credit line of $100,000 to $250,000, with APRs ranging from 10% to 120%. Revolving lines of credit can be used similarly to business credit cards, allowing the reuse of funds after repayment.
A small business line of credit is usually revolving. This means that it is not a one-time financing event. Instead, you will always have an available credit line that replenishes itself when you repay the amount you borrowed plus fees. For example, if you have a $50,000 credit line and borrow $10,000, your available credit is $40,000. However, when you repay the $10,000, your available credit goes back to $50,000.
Rates, Terms & Qualifications
A small business line of credit with no credit inquiry typically charges a weekly or monthly fee depending on the terms of the loan and the borrower’s qualifications. You can get approved in minutes and funded within 24 to 72 hours.
You should expect to find the following no credit check small business line of credit rates, terms, and qualifications:
- Loan amount: $2,000 to $250,000 and higher
- Estimated APR: 10% to 120%
- Term: Three months to one year
- Repayment schedule: Weekly or monthly
- Repayment fee: Typically between 4% and 10%
- Qualifications: Proprietary business assessment including revenues, growth, customer retention, and seasonality
In addition, some short-term business lenders also charge origination fees, monthly maintenance fees, and fees for not using your line of credit. However, many of these fees can be waived if the credit line is large enough. Further, it is possible to find lenders like Fundbox that do not charge these fees.
When it comes to qualifications, a good rule of thumb is that you will want to be in business for one or more years and ideally have $50,000 in annual revenue. Neither of these are hard qualifications, as all applications are based on proprietary online approval methods. However, it is always good to keep these numbers in mind when you apply.
Pros & Cons of Small Business Lines of Credit With No Credit Check
When deciding if a small business line of credit is the best option for your business, it is important to consider some benefits and drawbacks. A small business line of credit provides flexibility and security for small businesses. However, low borrowing limits and weekly repayments may be too restrictive for some businesses.
The pros of a small business line of credit are:
- Borrow the amount you need: With a line of credit, you can borrow up to your limit as you need the funds. This means that you are not paying interest for unnecessary funds as they sit in your bank account, which is likely with traditional lump sum loans.
- You can access the funds over and over again: Rather than borrowing a set amount like a loan, a revolving line of credit replenishes as you repay previous loans. This means you don’t have to apply for additional financing in the future and can keep using the line of credit.
The cons to consider with a small business line of credit are:
- Low borrowing limits: For many businesses, the maximum loan amounts offered by a line of credit may be insufficient for their capital needs. Fundbox offers up to $100,000 as a limit, but you may be able to borrow more than your maximum limit over the course of several draws.
- Frequent payment terms: Most lines of credit require weekly payments, and not every business is able to make them that frequently.
Where to Find Small Business Lines of Credit With No Credit Check
You can find small business lines of credit at leading online business lenders. Their short-term lines of credit typically have weekly or monthly repayments of principal plus a fee. These online lenders will often also offer different financing products in addition to lines of credit, such as invoice factoring and term business loans.
Fundbox lines of credit have terms of either 12 or 24 weeks. Repayment terms are weekly and include the repayment of principal plus a weekly rate that starts as low as 4.66%. There is no requirement to use more than you need, and you can get a decision in hours.
2. Invoice Financing With No Credit Check
Invoice financing, also known as accounts receivable (A/R) financing, is a lump sum advance equal to a portion of your outstanding invoices. You repay the loan over a specified time period at a specific rate. This financing is backed by assets and is a good choice for many businesses.
According to Greg Powell, Head of Marketing at Fundbox:
“There are three primary types of businesses that use invoice financing. The first are professional services companies, like accounting businesses, financial advisories, law firms, graphic designers, that are looking to grow their business. The second group are trade partners like contractors and landscaping businesses that also need funds to grow. The third group are manufacturers that turn raw materials into finished products.”
These businesses use A/R financing for outstanding invoices due in less than 90 days. This is because A/R financing companies will only let you borrow up to a percentage of your current invoices. Your maximum loan amount is therefore capped to the aggregate amount of your invoices due in 90 days or less. A/R financing sometimes does not require a credit check because it is backed by the value of your outstanding invoices.
Rates, Terms & Qualifications
Invoice financing companies typically charge both a discount rate and an advance rate. These two rates dictate how much the A/R factoring company is willing to lend and the charges they assess on that lump sum amount. You can get approved and funded within one to three days.
You should expect the following accounts receivable rates, terms, and qualifications:
- Loan amount: $1,000 to $5,000,000
- Advance rate: 85% to 100% of eligible invoices (typically not longer than 90 days)
- Starting discount rate (fee): 0.5% per week to 5% per month
- Estimated APR: 10% to 80%
- Term: One to 24 weeks
- Repayment schedule: Weekly or monthly
- Qualifications: Based on invoice sums and due dates
Eligible invoices are individual or a group of invoices that equal at least $1,000 in revenue and are due in 90 days or less. These invoices can be business-to-consumer (B2C), business-to-business (B2B), or even owed by the government.
Pros & Cons of Invoice Financing With No Credit Check
When deciding if invoice financing is the best option for your business, it is important to evaluate the associated risks and benefits. Benefits include quick access to your funds and retained customer relationships. However, the speed comes at a higher cost.
The pros of invoice financing are:
- Access funds quickly: Having access to the funds that are backed by the invoices you are already owed grants you faster access to your money. Rather than waiting for customers to pay your invoices, you can put the money to work for your business sooner by factoring them.
- You maintain control over your customer relationships: Unlike invoice factoring, which requires you to assign relationships to the lender, you retain the relationships with your customers.
The cons of invoice financing are:
- Costs are high: Typically the cost of invoice financing is higher than traditional loans, ranging from 10% to 80% APR.
- Inability to pledge invoices as collateral for other financing: After committing an invoice for financing, you will be unable to use that invoice as collateral for other loans. This can potentially restrict the amount of capital you have access to.
Where to Find Invoice Financing With No Credit Check
Accounts receivable (A/R) financing is offered by a range of online lenders. This is because A/R financing typically relies on technology to let the business owner choose which invoices they want advanced. Reputable lenders can be found in our guide on the best A/R financing companies, which includes Fundbox.
Fundbox offers invoice financing that acts as a line of credit with available draw amounts based on the value of your unpaid invoices, up to 100% and no interference with your customer relationships. Their maximum line of credit is $100,000 with a weekly fee starting at 4.66%.
3. Invoice Factoring With No Credit Check
Invoice factoring is a type of accounts receivable financing where a company actually sells its outstanding invoices to a factoring company. Factoring companies typically pay in two installments. The first is an advance rate and the second is the remaining invoice amount minus any fees and discounts, which will typically cost 13% to 70% APR.
However, invoice factoring is unlike accounts receivable (A/R) financing in that invoice factoring companies effectively “buy” a company’s outstanding invoices for a discount and actually collect payments from the customers. In return, the factoring company advances a portion of the owed amount to the company. A/R financing, on the other hand, does not buy the invoices but instead uses them as an asset to back the short-term loan, which is repaid by the company.
Invoice factoring is great for businesses that have at least $5,000 in monthly outstanding invoices due in less than 90 days. This is because most factor companies require $30,000 per month minimum, making it not a good option if you do not want to lock in financing or if you need smaller funding.
Rates, Terms & Qualifications
The two most important rates and terms of invoice factoring are the advance rate and the discount rate. The advance rate is the percentage of invoice value that a factoring company is willing to advance. A discount rate is the amount that the factoring company keeps as profit once the invoice is fully paid.
For example, if your company has an advance rate of 80%, a discount rate of 5%, and outstanding invoices of $10,000, the factoring company would first advance you $8,000. Then, the factoring company collects the $10,000 from your customer. Once collected, the factoring company pays you $10,500 and keeps the remaining $500 as its profit.
You should expect to find the following invoice factoring with no credit inquiry rates, terms, and qualifications:
- Advance amount: $5,000 and up per month
- Advance rate: 80% of invoice amounts
- Discount rate (fee): 0.25% to 1.35% per week
- Estimated APR: 13% to 70%
- Repayment term and schedule: No required payments; as your invoices come due, the factoring company collects the invoice on your behalf and settles the remaining debt
- Qualifications: Based on invoice sums and due dates
Pros & Cons of Invoice Factoring With No Credit Check
When deciding if invoice factoring is the best choice for your business, the most critical thing to consider is if you are comfortable assigning customer relationships to a third party, as well as if the convenience of no repayment is worth the associated costs for invoice factoring.
The pros of invoice factoring are:
- Repayment is automatic: When you factor your invoices, collecting the invoices becomes the responsibility of the factoring company. This means that rather than making payments, the factoring company collects the payments directly from your customers.
- Collection is easier: If you are having trouble collecting payment for invoices, an invoice factor provider may be able to get better results. They have extensive experience collecting invoices, and by factoring those invoices, the responsibility of collecting them becomes theirs.
The cons invoice factoring are:
- Your factoring company may contact your customers: Selling your invoices also means that the factoring company may be in contact with your customers about payment. The extent of these relationships can vary with factoring companies, but factoring companies often work with businesses in similar industries. So your customers may already be familiar with them.
- Costs are high: Invoice factoring can be very expensive, especially if you were able to get the invoices paid before factoring. Fees range from 0.25% to 1.35% per week, which can add up quickly for an invoice due in 90 days.
Where to Find Invoice Factoring With No Credit Check
Invoice factoring companies are typically the same lenders that offer accounts receivable financing and short-term lines of credit. You can find these lenders online and in our guide on the best factoring companies.
4. Purchase Order Financing With No Credit Check
Purchase order (PO) financing is a lump sum advance amount that is used to pay suppliers for goods and services that a business is reselling to a customer with a signed purchase order. It pays for costs of goods sold (COGS) upfront before a company receives customer payments, helping fulfill larger orders.
Purchase order financing is great for distributors, wholesalers, resellers, importers and exporters of finished goods, as well as outsourced manufacturers. PO financing can help these businesses deal with seasonality, high-growth environments, tight cash flows, and thin margins.
PO financing typically requires that businesses be B2B or B2G and have a 15% or greater profit margin, but does not require a credit check because it is backed by the value of existing purchase orders.
Rates, Terms & Qualifications
Purchase order financing is a specific type of product for a small subset of businesses. PO financing can advance up to 100% of a company’s cost of goods sold as long as there is a signed purchase order agreement. The cost of this advance ranges between 1.8% and 6%, with a 60-day repayment term.
It typically takes suppliers between one and two weeks to be paid by the PO financing company. Businesses that qualify for purchase order financing must sell tangible goods to other businesses or the government. They also have to have profit margins between 15% and 20% or more.
Pros & Cons of Purchase Order Financing With No Credit Check
Some pros and cons of purchase order financing include the ability to smooth over seasonality and easily finance and fulfill large orders. However, the required profit margin and restriction to companies that resell finished goods may be difficult to meet.
The pros of purchase order financing are:
- Good for seasonal businesses: If there is seasonality to your business, PO financing can help stock the shelves in anticipation of peak seasons. If you have orders with delivery at a later date, factoring those invoices can allow you to meet the needs of those customers.
- Allows big orders to be filled with ease: Large orders are a good problem to have, but small businesses may struggle to fill these orders without additional capital. PO financing helps small businesses fill large orders, especially if those orders are unusual or unanticipated. By factoring the invoices for a large order, you can access the resources necessary to deliver it on time.
The cons to consider with a purchase order financing are:
- You need at least a 15% profit margin: To qualify for purchase order financing, you will often need to demonstrate that you have at least a 15% profit margin. Some businesses that are typically competitive and have low overall margins, or businesses that are growing quickly and reinvesting in the company, may find these criteria difficult to meet.
- Only finished goods qualify: Only companies that resell finished goods qualify; adding anything to the process, including assembly, installation, or customization, would not qualify.
Where to Find Purchase Order Financing With No Credit Check
Purchase order (PO) financing companies typically come in the form of online lenders that also offer short-term lines of credit and more. It is a good idea to shop around leading online lenders to check the amount of the advance as well as the monthly cost of the advance amount.
5. Revenue-based Financing With No Credit Check
Revenue-based financing (RBF) is a no credit check loan that has its repayment terms based on a percentage of a business’ revenue. Revenue-based financing, also known as royalty-based financing, is similar to a merchant cash advance except instead of paying with daily credit card receipts, businesses pledge to repay with all of their revenue.
Revenue-based financing with no credit pull is great for high margin and subscription-based companies. The more revenue a company makes, the quicker it can repay the revenue-based financing. For this reason, RBF fluctuates in its repayment terms. RBF does not require a credit check because repayments are based on a business’ future revenue.
Rates, Terms & Qualifications
Revenue-based financing typically charges a percentage of a company’s future gross monthly revenue. This continues until the company repays a total cost of capital outlined equal to a percentage of the amount borrowed.
You should expect the following revenue-based financing rates, terms, and qualifications:
- Loan amount: $50,000 to $3,000,000
- Repayment amount: 2% to 8% of the company’s monthly revenue
- Total cost of capital: 1.35x to 2x the borrowed amount
- Effective APR: 35% to 200%
- Qualifications: $15,000 to $100,000 minimum monthly revenue, 50% minimum gross margin
Revenue-based financing is one of the more costly no credit check business loan options, and takes between three and four weeks to fund. For these reasons, it is not the quickest and most effective business loan that does not require a personal credit pull. Since they also require minimum monthly revenues, it is best to only use this product if you have high margins or recurring monthly revenue.
Pros & Cons of Revenue-based Financing With No Credit Check
Revenue-based financing can be the right financing solutions for businesses with high revenues that are able to quickly repay their loans. However, the high costs attached and the extended time to funding are major disadvantages to this kind of financing.
The pros of revenue based financing are:
- Startup funding without diluting equity: Unlike a venture capital firm, which will often require a 20% to 40% stake in the company to provide funding, revenue-based financing doesn’t require any equity. This allows entrepreneurs with growing companies to retain their ownership and ability to make critical decisions in the company.
- No collateral is required: With revenue-based financing, your loan amount is based on your revenues, and therefore may not require collateral.
The cons of revenue-based financing are:
- High costs: The costs of revenue-based financing are very high, and therefore should be considered as a last resort for most businesses.
- Slow funding: With funding often taking several weeks, these loans are not available very quickly and require some planning to be timely.
Where to Find Revenue-based Financing With No Credit Check
Revenue-based financing is typically offered by specialized lenders. Usually, you will have to enter your borrower information online and wait for a representative to contact you regarding your application. The lender will verify your revenue and then underwrite the loan and payment terms.
6. Merchant Cash Advance With No Credit Check
A merchant cash advance (MCA) with no credit inquiry is a lump sum loan given to a business in return for a fixed percentage of its daily credit card sales. Repayments are typically made daily and continue until the loan amount is repaid. The factor rate is typically a percentage of the total loan amount.
This means that a merchant cash advance (MCA) technically is not a loan. Instead, it is a promise by a business to sell an MCA provider its future daily credit card receipts for a lump sum payment made today. An MCA is a good option for businesses that have $50,000 or more in annual credit card sales.
The exact rates and terms of the MCA are decided before the advance amount is made. Once agreed, the MCA provider automatically deducts payments from your daily credit card receipts equal to the holdback percentage. This continues until the provider recoups payments equal to the agreed factor rate. An MCA does not require a credit check because repayments are based on future credit card sales.
Rates, Terms & Qualifications
A merchant cash advance (MCA) is a unique type of no credit business loan in that it charges a factor rate equal to a percentage of the amount advanced. Each day, the MCA provider takes a percentage of daily credit card sales to repay the loan.
You should expect the following merchant cash advance with no credit inquiry rates, terms, and qualifications:
- Advance amount: $5,000 to $500,000
- Factor rate: 1.09x to 1.41x of advance amount
- Effective APR: 80% to 130%
- Term: Four months to 18 months (variable based on daily credit card sales)
- Repayment schedule: Daily
- Qualifications: Three or more months in business, $5,000 or more monthly credit card sales
In addition to some of these rates and fees, merchant cash advance providers might also charge origination fees between 0% and 4%. The typical time to approval and funding is between 48 to 72 hours.
Pros & Cons of Merchant Cash Advance With No Credit Check
Merchant cash advances come at a very high cost, but may be the only option for some businesses that process credit card transactions and have poor credit. They also simplify repayment by being taken directly out of credit card transactions. A major disadvantage is that repaying your loan early doesn’t reduce the overall interest owed on the loan, like it would for a credit card.
The pros of financing with a merchant cash advance are:
- Repayment is automatic: With payments withheld from daily credit card transactions, there are no payments to make to the lender, eliminating some of the hassles.
- Available to businesses with high credit card revenue: If you have credit card revenue but don’t have good personal credit, this may be the best way to obtain financing for your business.
The cons of financing with a merchant cash advance are:
- Costs are high: With the highest effective APR, we have seen that the cost of these loans can quickly add up, and should only be considered as a last resort.
- No prepayment benefit: The terms of the loan are decided at origination, leaving the borrower in a position where early repayment of the loan does not yield any benefit. This is because the total amount you repay is set at the start of the loan, rather than calculated on a payment-by-payment basis.
Where to Find a Merchant Cash Advance With No Credit Check
Merchant cash advances (MCA) are issued by online merchant cash advance providers who specialize in this business loan with no credit check. You can check out our buyer’s guide on the best MCA providers for more information.
7. Crowdfunding With No Credit Check
Crowdfunding is a no credit inquiry financing option that is not a loan at all. Instead, crowdfunding is a way to raise money from your network of customers or users in return for future products or services. Crowdfunding websites let you set up campaigns with goals that have to be met to receive the funding.
You can think of crowdfunding like a pre-sale campaign. Businesses have a product or service they are developing and use crowdfunding sites to finance the first manufacturing run of their new product. Crowdfunding is therefore right for early-stage businesses that need a small business startup loan with no credit check.
Rates, Terms & Qualifications
There are no strict qualifications with crowdfunding sites. Instead, some crowdfunding sites specialize in specific niches, but all will either take the form of debt or equity crowdfunding. Debt crowdfunding is similar to a traditional loan, except individual lenders will come together to fund it and charge an agreed upon interest rate. Equity crowdfunding involves taking on equity investors, made possible by the JOBS act.
The two most common things exchanged for crowdfunding are:
- Future payments from revenue (debt crowdfunding): With debt crowdfunding, a company will often produce the reason for their financing needs and some additional information about the past experience of the founders and the company. Potential investors will then judge the company and lend capital at an agreed upon rate and repayment term.
- Ownership of the existing company (equity crowdfunding): Equity crowdfunding doesn’t require the sale of goods in advance; instead, you are effectively selling parts of the company. For this reason, many investors on crowdfunding sites will look for some proof of concept and existing revenue and growth before they invest. This can be good for businesses that don’t sell directly to consumers and have established some early success.
Regardless of which crowdfunding type you use, campaigns are typically charged a 3% to 5% fee if a business meets its funding goals. Planning and running a successful campaign can be challenging, and it’s important to familiarize yourself with the required steps for crowdfunding success.
Pros & Cons of Crowdfunding Sites With No Credit Check
When deciding if using crowdfunding sites for financing is the best option for your business, you should consider some of the advantages and disadvantages of the process. Not all campaigns succeed and funding can take a very long time. However, it is available to new businesses and can be a good way to get customers.
The pros of crowdfunding are:
- Good for startup businesses: Equity and debt crowdfunding do not have a minimum requirement for time in business, making it a great source of funding for startups.
- Way to build new relationships: Getting people invested in your business can be a great way to build relationships and earn new customers in the process, as they closely follow your company and product development.
The cons to crowdfunding are:
- No guarantee of success: There is an art to running a good crowdfunding campaign, and even that often does not ensure that people will be interested and funding goals will be met.
- Delayed time to funding: With campaigns often lasting a month, and with additional time to plan the campaign before and receive the money afterward, this is not a good option for businesses that need funding quickly.
Where to Find Crowdfunding Sites With No Credit Check
There are many reputable crowdfunding sites available to businesses of all shapes and sizes. These sites include Kickstarter, Indiegogo, and others.
Who No Credit Check Business Loans Are Best For
No credit check business loan borrowers typically fall into three broad groups. These include borrowers avoiding a hard credit check, business owners with less than perfect credit, and companies that need quick access to capital.
For each of these business owners, there are specific no credit check loans that are best for their financing needs. For example, A/R financing and merchant cash advances are good for businesses with a large number of outstanding invoices or daily credit card sales. Lines of credit are best for businesses that only want to borrow exactly what they need.
The financing options offered by Fundbox are unique due to how many different business owners can use it. Their proprietary method of qualifying you for a loan only takes a few minutes and can get you up to $100,000 for up to 24 weeks, with weekly fees that start at 0.5% per week.
Business Loans With No Credit Check Frequently Asked Questions (FAQs)
We have put together some of the most frequently asked questions about no credit check business loans. If we do not answer your question in this guide or in the FAQs below, we invite you to ask us a question in the Fit Small Business forum.
Here are the most frequently asked questions about small business loans with no credit check:
How can I get a business loan with no credit?
To get a business loan with no credit, you will need to rely on lenders that use different metrics to confirm your creditworthiness. These metrics include outstanding invoices, recent growth, and credit card payments. Many lenders will connect to your bank account to assess these factors to determine if you qualify.
How do I get a small business loan with bad credit?
Most lenders who work with borrowers with bad credit prefer a score greater than 500. However, there are some that have no minimum credit score requirement and instead rely on recent performance or invoices for collateral. Working with one of these lenders is a great way to secure a bad credit business loan.
What is the best way to qualify for additional small business financing?
The biggest barrier to getting financing is your personal credit score. If you have no credit score, we have an article with some tips on the best way to build your credit. If you do have some credit history but it is too low to qualify, you can get help from a credit repair company.
Small business loans with no credit check are short-term financing options that do not require a hard personal or business credit check as part of the application process. These no credit business loans are used by business owners with bad credit or by those who need capital quickly.
Fundbox offers short-term lines of credit with terms between 12 and 24 weeks. Repayment terms are weekly and rates start as low as 4.66%. Since Fundbox offers lines of credit, there is no requirement to use more than you need. Repay early and they waive the remaining fees. Qualification can take minutes: